100 Percent Investment Property Loans

Posted on July 15, 2005 by
Ilyce R. Glink

Q: I keep hearing about 95 percent or 100 percent investment property loans being available. I cannot seem to find a bank out there offering this type of loan. Is the only way to get this type of loan to use a mortgage broker? I would rather deal directly with a bank than have to go through a 3rd party.

A: Generally it’s harder to obtain a mortgage for an investment property than for your own personal residence. And if you want to put no money down, it can be extremely hard to get financing.

Many lenders will require you to put down at least 30 percent of the price for the property. Some are more lenient and will allow you to put down just 20 percent. In certain circumstances, some lenders will allow 100 percent financing, but only if the property was purchased at below market pricing and the lender is sure that upon resale the property has appreciated substantially in value.

You should check with some real estate attorneys or brokers in your area or mortgage brokers that specialize in investment properties. Any of these individuals should know of some reputable lenders for investment properties.

Finally, if the property you are buying is a four unit building or less and you will make one of the units your home, you can get a conventional owner-occupied loan from almost any lender. These loans, unlike loans for properties that are purely investments, are bought by Fannie Mae and Freddie Mac on the secondary loan market.

July 15, 2005

UPDATE ON 100 PERCENT INVESTMENT PROPERTY LOANS

September 23, 2010

Since the mortgage and real estate meltdown occurred, investment property loans have become increasingly difficult, if not impossible, to obtain. There are still some lenders out there that will give borrowers loans on investment properties. If those investment properties are residential properties, you may have better luck. However, for strip centers, larger apartment buildings and other real estate, lending has all but dried up, particularly if you want a high loan to value loan or a 100 percent loan. High loan to value loans are almost impossible to get.

Most lenders today will require at least 25% down or equity of up to 25% in the property to refinance a property. And, if you are buying a property, you might expect a lender to require that same 25% or more. In the boom years of real estate, some real estate lenders had unique ways to value investment properties and even were willing to allow borrowers to stretch the method of computing income from the properties. These days lenders have become quite conservative and will make it difficult for a borrower to use certain sources of income to receive additional money from a lender.

If you are looking to invest in real estate during these depressed real estate market days, you’ll need to make sure you have enough money to put down for the property and you might wish for the days when you were able to get 100 percent financing on an investment property loan, but getting a loan at all these days for an investment property is the goal today.

One Response to 100 Percent Investment Property Loans

To whom it may concern, I am interested in obtaining a !00% loan on a resort property business. My current income is from V.A. Benefits. I earn $46,000/ year take home. The business is to give my wife an income. My credit rating is around 625. We have filed two bankruptcies in 10 years. The owner is asking $450,000 for the property. Also he would consider carrying the note if I came up with $200,000. I am asking for either one of these. To close we would like to make arrangements where my income could pay most if not all of the note and live off of the income of the business. My income is suppose to be for the rest of my life unless something tradgic were to happen. We are asking someone to give us this opportunity. If you could help us please let us know or if you know someone that could help also we’d like to know. thank you for your time and consideration in this matter. Sincerely
M. Slaughter

Definitioner

Real Estate is land and anything permanently attached to it, such as buildings and improvements.

Mortgage Broker

A Mortgage Broker is a company or individual that brings together lenders and borrowers and processes mortgage applications.

Mortgage

A Mortgage is a document granting a lien on a home in exchange for financing granted by a lender. The mortgage is the means by which the lender secures the loan and has the ability to foreclose on the home.

Loan

A Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interest.

Lender

A Lender is a person, company, corporation, or entity that lends money for the purchase of real estate.

Equity

Your share of ownership in a company. Stockholders are often referred to as equity investors, because they invest in the equity of a company.